THE SRILANKAN ECONOMIC CRISIS

                  Sri Lanka, the island country of South Asia  has been going through their biggest economic crisis for the past one year until the International Monetary Fund (IMF) has approved a nearly $3 billion financial assistance to Sri Lanka on March 20, 2023.This has brought a great relief to the country which could help it to revive from its present economic crisis . The decision will allow an immediate disbursement of about $333million which will help the country to overcome the current situation. It all started from March 31,2022 when the demonstrators  marched to  Sri Lankan president Gotabaya Rajapaksa's residence to protest over the economic crisis. The situation worsened and a state of emergency was declared when Rajapaksa fled Sri Lanka in July,2022.The people have been struggling with daily power cuts and shortage of basics such as fuel, food and medicines. the country was facing inflation at more than 50%. The country was running out of fuel for essential services like buses, train and medical emergencies. Also they couldn't import fuel due to lack of foreign currency. When the shortage of fuel became intense the price also gradually increased and also led to the closure of schools as transportation became difficult. Also the interest payment of their foreign debts piled up and were unable to pay. This completely shattered the reputation of the country among its investors and this made them more difficult to borrow money from other countries at this time of crisis.

                            According to the Sri Lankan government, the main cause for this crisis was covid , where the tourism industry was affected very badly as tourism was their major source of earning foreign currency. But  according to the experts ,this crisis was due to the poor economic mismanagement of President Rajapaksa. It was noticed that the country after 2009 civil war concentrated on selling goods to the domestic market  and the exports was less than the imports. The  has led to the imbalance of trade and by the end of 2019 the foreign currency reserves dropped from $7.6 billion to $250million. Another major reason was the tax cuts introduced by president Rajapaksa which led to the crisis as for any country tax is one of the major source of income generation. Also the shortage of foreign currency led to the ban of chemical fertilisers by the Sri Lankan government. This made the farmers to use organic fertilisers which led to crop failure and thus had to get food stocks from abroad which later became difficult as import became impossible due to financial crisis.

                      The new president Ranil Wickremesinghe successfully negotiated economic support from top lenders and finally managed to get financial assistance from IMF which will help in restructuring the $58 billion of debt to some extent .The new policies and strategies is gradually leading Sri Lanka to the right track.